The Securities and Exchange Commission announced today that it filed an emergency enforcement action to halt an ongoing hedge fund fraud concerning three related hedge fund investment advisers, multiple hedge funds, a registered broker-dealer and the principals that control these entities.

The Commission's complaint alleges that from approximately 1999 to the present, the Defendants have raised at least $81 million from investors nationwide by boasting annualized returns of 125 to 150% over the last several years and by sending false account statements to investors showing similar gains. According to the complaint, the hedge funds were suffering tremendous trading losses and only about $11 million remains of the more than $81 million that investors put into the hedge funds.

The complaint charges all the Defendants with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further charges the Advisers with violations of Section 206(1) and (2) of the Investment Advisers Act of 1940 (Advisers Act) and charges Defendants Lee, Yung Kim and John Kim with aiding and abetting violations of Section 206(1) and 206(2) of the Advisers Act.

It its emergency action, the Commission is seeking, among other emergency relief, a temporary restraining order (i) freezing the Defendants assets; and (ii) appointing a receiver over the Funds, the Advisers and Shoreland. In addition to this emergency relief, the Commission also seeks an order requiring Lee, Yung Kim and John Kim to surrender their passports temporarily and prohibiting them from traveling outside the United States, enjoining the Defendants, preliminarily and permanently, from committing future violations of the foregoing federal securities laws, an order requiring the Defendants to repatriate to the United States all investor proceeds and a final judgment ordering the Defendants to disgorge ill-gotten gains, and assessing civil penalties.